EU to Present Draft Terms for U.S. Trade Deal in March

Feb. 13 (Bloomberg) -- The European Union aims to complete
trade talks with the U.S. within two years now that leaders on
both sides of the Atlantic have pledged to move ahead, EU Trade
Commissioner Karel De Gucht said.

A transatlantic trade deal is progressing after President
Barack Obama promised to pursue an agreement to expand the
world’s largest economic relationship in his State of the Union
speech yesterday. The 27-nation EU says the accord will seek to
lower tariffs, ease regulatory barriers and expand access in
investment, services and public procurement.

“We are committed to making this relationship an even
stronger driver of our prosperity,” Obama, EU President Herman
Van Rompuy and European Commission President Jose Barroso said
today in a joint statement. The EU may complete its preliminary
work by mid-year, Barroso told a Brussels news conference, and
Van Rompuy called a possible deal a “great prospect” in a
message on Twitter.

The EU plans to present draft negotiating plans in March to
kick-start the talks, which it says may lead to an accord that
will add 86 billion euros ($116 billion) a year to the bloc’s
economy. While trade and investment between the U.S. and the EU
was valued at $4.5 trillion in 2011, the two governments have
been at odds over issues including farm subsidies, health
protections and regulatory standards.

Agriculture, GMOs

“Everything’s on the table across all sectors,” including
agricultural issues and genetically modified products, U.S.
Trade Representative Ron Kirk said on a conference call with
reporters.

Formal discussions should start at the “earliest possible
moment,” the EU said in a statement today. “Both sides aim to
advance fast once negotiations are started.”

Barroso anticipates difficulties in moving forward on both
sides of the Atlantic. He said agriculture offers the EU a
chance to expand exports while also touching on sensitive
issues.

While the U.S. has criticized EU curbs on hormone-treated
beef and other biotechnology products, Barroso said “basic”
accords on hormones in livestock and genetically modified crops
won’t be part of the talks. He didn’t elaborate.

Broad Reach

U.S. officials emphasized the broad reach of the talks.

“Nobody should be under any impression that we’re not
going to be resolving agricultural issues,” including those
dealing with health and safety, as part of the discussions,
Michael Froman, deputy national security adviser for
international economic affairs, said on the conference call.

The scope of the deal will be more important than the speed
at which it comes together, De Gucht told reporters in Brussels.
There are no “explicit carve-outs” in terms of what will be on
the agenda, he said.

A high-level working group recommended to both sides that
talks move ahead. The report, released today, called for
“negotiations on a comprehensive, ambitious agreement that
addresses a broad range of bilateral trade and investment
issues, including regulatory issues, and contributes to the
development of global rules.”

The EU says an accord may add 0.5 percentage point to the
bloc’s gross domestic product, and 0.4 percentage point to U.S.
GDP, by 2027. That’s the equivalent of 86 billion euros of added
annual income for the European economy and 65 billion euros of
extra annual income for the U.S. economy, the EU said.

Merkel ‘Grateful’

German Chancellor Angela Merkel, who has publicly urged the
Obama administration to negotiate a trade deal with the EU, is
“very grateful that he has put the topic on the agenda,” her
chief spokesman, Steffen Seibert, told reporters in Berlin.
Obama’s backing for an agreement was “perhaps the most
important signal on Europe” in his State of the Union speech,
Seibert said.

An EU-U.S. commerce deal may boost German exports by a
quarter of a percentage point, said Volker Treier, an economist
at DIHK, an umbrella group of German chambers of commerce. “A
new trans-Atlantic free-trade initiative could give major
impulses to German-American economic ties,” he said in a
statement.

Boeing-Airbus

The EU may seek to use the talks to boost its agricultural
exports, while not directly addressing a longtime dispute
between Boeing Co. and Airbus SAS, De Gucht said. Talks continue
separately to resolve spats involving the two airplane
manufacturers, he said.

Talks with the EU may help Obama meet his goal of doubling
exports by the end of 2014 as World Trade Organization
negotiations stall and China expands its role internationally.
Obama’s administration also plans to complete negotiations on
the Trans-Pacific Partnership with 10 nations and buttress
America’s role as a manufacturing center.

Non-tariff barriers can be changed to speed trade and help
the U.S. expand its exports to the EU, which stand at $459
billion.

Recent U.S. trade deals required years of negotiations. The
U.S. didn’t specify when the talks may begin. Kirk has said he
plans to leave office by the end of this month and a replacement
hasn’t been named.

Congressional support for an EU deal depends on issues
including better market access for U.S. agricultural goods,
strong intellectual-property protections and a means to settle
disputes, leaders of the Senate Finance Committee said yesterday
in a letter to Kirk.

‘Enticing Opportunity’

A free-trade agreement between the U.S. and EU is an
“enticing opportunity,” wrote the senators, Max Baucus, a
Montana Democrat, and Orrin Hatch, a Utah Republican.

U.K. Prime Minister David Cameron, who has said he’ll push
for an EU-U.S. accord at the Group of Eight summit in Northern
Ireland this year, welcomed Obama’s announcement.

“Breaking down the remaining trade barriers and securing a
comprehensive deal will require hard work and bold decisions on
both sides,” Cameron said in an e-mailed statement today. “But
I am determined to use my chairmanship of the G-8 to help
achieve this and to help European and American businesses
succeed in the global race.”

The EU, reeling from a sovereign-debt crisis, and
Washington-based industry groups including the U.S. Chamber of
Commerce and the Business Roundtable have urged the Obama
administration to pursue a trans-Atlantic accord. Separate trade
talks with Canada have been stalled; De Gucht said today he
hopes that agreement can proceed in coming weeks.